Build Your Future with Good Private LoansJune 6, 2021
The private loan is very useful for any student who dreams of higher studies. It is a non-governmental credit based loan system which helps the students to clear their outside debt. The federal student loans, grants and scholarships are not always enough to fully satisfy the monetary needs of higher studies. The private student loans cover the many additional expenses that a student needs to bear in achieving higher education. Many private loans help a student not just in his total tuition fees but also in rent fees, textbooks fees and many other types of fees.
The amount which a student can borrow depends from lender to lender. Maximum lenders cover the entire tuition fees which is far better than any other credit loans. The students need to file the total cost of attendance from the certified school. The lenders will calculate the figure provided by the certified school. The students need to make sure that they get the grace period before paying the loan amount. They should select the appropriate loans which meet their needs.
The students must arrange some vital information before applying online.
- Gather your social security number.
- Collect the personal reference (parent, relative or guardian). Also collect their phone number.
- Provide income and employment information. It includes the employer’s phone number and address, your total annual income, your earlier work information if applicable.
- Try to figure out the actual loan amount. Request the lender for your desired amount.
- Arrange school information: the name of the school, its address, phone number and email address, state, city, your current grade level, or the expected graduation date if you are a graduate student.
- Submit the monthly rent amount and mortgage payment. If you have a cosigner then he needs to provide the important information on his background.
Important Tips before Applying
Before applying for private student loans the students are advised to take the advantages of federal loan aids. This is because the private student loans are very costly than federal student loans. Try to get non-governmental loans so that you don’t have to borrow the total amount from private organization. Find out the various scholarships on the desired subject. The scholarships help to cut the total course fees. If you do not get the governmental aids then you have no choice but to opt for the private lenders who will ensure you financial status by approving your desired loan.
Private Mortgage Insurance – A protection or an extra cost?
Do you wish to own your dream home? Does your limited income stop you from putting aside enough money for down payment of mortgage? Don’t worry, since private mortgage insurance is the ultimate solution for you. The increasing defaults on mortgage loans lead the banks to set stringent real estate lending criteria especially for those who have poor credit profiles and no cash to put down initially. In such situations, private mortgage insurance facilities both the borrower as well as the lender.
In order to cater to the needs of those who don’t have any savings for down payment but have good credit profiles, banks lend real estate finances backed by insurance called private mortgage insurance. Normally, if a borrower has 20% or more of the sales price to put down, banks are ready to lend normal mortgages. But if a borrower has less than 20% of the sales price to put down, they are mostly required to secure private mortgage insurance.
Purpose of PMI!
The basic purpose of PMI is to enhance the activity of real estate market by helping borrowers as well as lenders. Private mortgage insurance provides protection to lenders if the borrowers do not pay their mortgage obligations, the insurance company would indemnify the lenders. On the other hand, it also facilitates borrowers by making them eligible for securing a decent mortgage for themselves, despite having no cash for down payment.
Costs of PMI!
The costs of PMI vary from lender to lender, but generally it costs from 0.5% to 1% of the annual mortgage amount. The borrowers are required to continue the payments of PMI until their equity in the house reaches 20%. But this is not always the case, since the cancellation of the PMI is decided by the lender based on the payment history of the mortgage. If the borrower consistently make late payments or don’t make payments at all, banks can ask the borrower to continue paying for PMI until they have paid down 50% to 80% of the home value.
Should it be avoided?
There is a common misconception about PMI that it only protects lenders but not borrowers. It is wrong, since PMI also protects borrowers against foreclosures. If in any case borrowers are not able to make their obligations to real estate lenders, the company pays on their behalf and protects them from losing their dream home. This situation arises when the borrowers face temporary difficulty and they are willing to continue their payments once they get out of their problems.
Some borrowers find PMI an extra burden on them due to its heavy cost but my point of view is different. PMI though costs some extra money but this cost is worth the investment, since it makes you the owner of your dream house. Moreover, payment of PMI is a temporary cost but its benefits are for lifetime. In most cases, when your equity in the house reaches 20%, the payments of PMI cease but if they don’t you can cancel its payments by the following ways.
- You can take a piggy mortgage loan or the second mortgage on the top of the first which requires you to pay higher interest rate on the initial mortgage. Piggy mortgage loans increases the loan to value ratio and thus ends the need of the PMI.
- If the value of the homes has increased you can revaluate the house and can ask the lender to cancel PMI. If you think your equity now makes 20% or more of the figure needed, the bank can allow you to cancel your PMI.
Though PMI is expensive, yet it is quite advantageous to the borrowers as well as lenders. Borrowers must go for securing real estate finances though PMI only and only if they think they would be able to attain 20% equity otherwise they would only end up with poor credit profiles.